What is the ASEAN Economic Community (AEC) and who are its members?
The ASEAN Economic Community (AEC) is an initiative by the 10 ASEAN member states to create a single market and production base across the region. Its full name is the ASEAN Economic Community, abbreviated as AEC, and it includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Signing Date and Entry into Force
Signing Date: The Kuala Lumpur Declaration on the Establishment of the AEC was signed on November 22, 2015, at the 27th ASEAN Summit.
Entry into Force: The AEC was officially established on December 31, 2015.
Note: The AEC is a process of integration, built upon a number of core agreements that have already entered into force, such as the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN Comprehensive Investment Agreement (ACIA), etc.
Negotiation Context and Rationale for Establishment
Context: The concept of ASEAN economic integration was first introduced in 1992 with the ASEAN Framework Agreement on Enhancing Economic Cooperation. Important legal instruments such as the Common Effective Preferential Tariff (CEPT/AFTA) for trade in goods (1992), the ASEAN Framework Agreement on Services (AFAS, 1995), and the ASEAN Investment Area (AIA, 1998) laid the foundation.
Rationale:
- The ASEAN Vision 2020 (adopted in 1997) set the goal of developing ASEAN into an ASEAN Community.
- To promote deeper regional integration and enhance ASEAN’s competitiveness in the global market.
Core objective: To transform ASEAN into a single market and production base, with free flow of goods, services, investment, capital, and skilled labour.
What are the main goals and commitments of the AEC?
The AEC aims to transform ASEAN into a single market and production base, fostering a highly competitive economic region, promoting equitable economic development, and integrating the region into the global economy. These core objectives are supported by key commitments outlined in foundational agreements.
Tariff Reduction/Elimination (Goods)
Foundational Agreement: ASEAN Trade in Goods Agreement (ATIGA), which replaced CEPT/AFTA.
Liberalisation Roadmap: The tariff reduction commitments under ATIGA are the most extensive and rapid among FTAs that Vietnam has joined.
- ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand): Eliminated tariffs on almost all tariff lines (100%) by 2010.
- CLMV group (Cambodia, Laos, Myanmar, Vietnam): Eliminated tariffs on most tariff lines by 2015, with flexibility to remove tariffs on the remaining 7% sensitive tariff lines by 2018.
Non-Tariff Barriers (NTBs): Efforts to minimise NTBs and enhance customs cooperation.
Services Liberalization
- Foundational Agreements: ASEAN Framework Agreement on Services (AFAS) and, more recently, the ASEAN Trade in Services Agreement (ATISA).
- Objective: Liberalise intra-regional services trade.
- Commitments: Service liberalisation commitments under ASEAN are gradually higher than those under the WTO framework, through periodic Packages of Services Commitments.
Investment, Intellectual Property, and Government Procurement
- Investment: ASEAN Comprehensive Investment Agreement (ACIA) provides a comprehensive legal framework covering both liberalisation and investment protection, applicable to ASEAN investors and ASEAN-based investors.
- Intellectual Property (IP): Cooperation through the ASEAN IPR Action Plan, aiming to promote harmonisation and integration of IP systems within the region.
- Government Procurement: The AEC currently does not have a comprehensive and binding chapter on Government Procurement, unlike some new-generation FTAs.
E-Commerce, Labour, and Environment Commitments
- E-Commerce: The ASEAN Framework Agreement on Facilitating Electronic Commerce provides a conducive environment for electronic transactions.
- Labour: The ASEAN Agreement on Movement of Natural Persons (MNP) facilitates the free movement of skilled labour (professionals, skilled workers, etc.) through Mutual Recognition Arrangements (MRAs) in several professions (accounting, engineering, architecture, medical, tourism, etc.).
- Environment: The AEC incorporates sustainable development elements but does not yet have a separate binding chapter on Environment, as in new-generation FTAs. Instead, initiatives and cooperation are carried out under the ASEAN Socio-Cultural Community pillar.
Where can I find official information and agreements for the AEC?
For businesses seeking to understand or engage with the ASEAN Economic Community (AEC), official information and legal documents are primarily available through ASEAN’s integrated portals and the relevant government ministries of each member state. This is because the AEC represents an ongoing process built upon numerous legal frameworks.
Full-text Agreements
ASEAN Trade in Goods Agreement (ATIGA):
- Official ASEAN link: Available on the ASEAN Secretariat’s website.
- Vietnam link: Ministry of Industry and Trade (MOIT) portal or Vietnam FTA Portal.
ASEAN Comprehensive Investment Agreement (ACIA) & ASEAN Trade in Services Agreement (ATISA): Also published on the ASEAN Secretariat website and portals of Vietnam’s MOIT and Ministry of Planning and Investment.
Implementation Guidelines (Handbooks, Websites)
Official AEC/Economic Integration Portals:
- ASEAN Secretariat: https://asean.org/
- Vietnam (MOIT): https://moit.gov.vn/
- VCCI’s AEC Portal: https://aecvcci.vn/
Specialised Resources:
- Handbooks/Guides: MOIT and MPI regularly publish explanatory materials (books, guides) on ATIGA, ACIA, and other AEC agreements.
- Rules of Origin (ROO) under ATIGA: Available from the Vietnam Customs or the MOIT portals.
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